Thursday 14 November 2013

E.On. report Q3 2013

E.On , Q3 2013, report

The biggest German energy provider arrived with their third quarter report for 2013 and it can be found here (all information has been extracted from there). The report, which look very professional, is as thick as a book written by an American professor getting paid per written page. The response from the stock market was a direct minus but over the day the share price worked itself upwards and finally it stopped on +2.1% which made E.On. the winner of the day. So which response was correct? The direct drop or the +2%?

When we take a closer look on the highlights for the running nine months:

Q3 2013, highlights, E.ON.

Then we see that they have dropped, like most of the European providers, in sold electricity as well as gas (it is now mid November and my heating, which runs on gas, is not turned on yet which is not only based on me cutting expenses but also due to that it is not needed). E.On. have a very similar net income as the nine months in 2009 and they have significantly decreased their labour force, mainly due to divestment. The current net income per share is at 1.37€ if we expect a poor Q4 they should manage to get 1.83 € EPS in the year and with the 50-60% dividend payment I can expect between 0.92 to 1.1 € in dividend per share which is fully acceptable to me even though it will probably become a decrease from last years 1.1 € per share.

Global commodity sales (gas, gas storage etc.) which represents over 53% of their total sales have had a pretty bad year both in terms of revenue and in earnings. The only reason for why the earnings are as good as they are, are due to divestments.

When we take a look at quarter three then they had a loss of -456 million € in 2013 and in 2012 they also had a loss but less since it was only -186 million €. So the third quarter was really bad! So in my eyes the direct drop was the correct response and it should have stayed there.

Conclusion: E.On. is not having a good year and over four billion decreased sales of commodity during the running nine months is hurting them. However I bought them for dividends and from what I saw here I will still get a pretty nice payment so the company stays in my portfolio but I will also not buy any more shares.

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